Fast, Invisible Hands
Most small “retail” investors, gamely poking around for profit on laptops or iPads in bedrooms and coffee shops, are at least somewhat aware that they operate on a field far removed from the gamesmanship of the big players on Wall Street. They may be surprised to learn, however, that there is a new breed of Wall Street player that puts even the deep benches of a Goldman Sachs or a Morgan Stanley to shame.
High-frequency traders move in and out of short-term positions on equities, sometimes in microseconds, aiming to capture just a fraction of a cent in profit on every trade. The phenomenon, growing since 2009, has been blamed for increased market volatility, including the “flash crash” of May 6, 2010. Some argue that such firms are simply skimming the world’s trading systems and bringing further discredit to the U.S. financial industry.
Flash Boys: A Wall Street Revolt, a new book by Michael Lewis, focuses a strobe light on these lightning-fast traders, arguing that this emerging industry is just more evidence of a rigged marketplace. Supporters of high-frequency trading say its trade-gobbling algorithms actually depress volatility and lower transaction costs for retail investors.
Federal regulators have so far declined to rein in high-frequency trading, but its excesses could be curtailed with the long-sought restoration of a financial transactions tax, a move supported by major economists and even U.S. billionaires. The tax also has a supporter in Rome, Pope Emeritus Benedict XVI. In 2011 he suggested that revenue from transaction taxes could be devoted to responding to global humanitarian and development crises. This could put Wall Street productively to work on the world’s glaring inequities market.
As tensions mount in the Central African Republic, the Obama administration has appointed a special representative to coordinate a U.S. response, and the United Nations agreed on April 10 to dispatch a peacekeeping force to the malfunctioning state.
More than 630,000 people are in flight from the violence that has plagued the country since March 2013, when Seleka rebels briefly seized power. Now 2.2 million, about half the population, are in need of humanitarian aid. Children are dying from hunger and preventable diseases, their desperate parents unable to seek either food or assistance because of insecurity in the streets. Tit-for-tat violence has continued between self-appointed protectors among the nation’s Christians and rebel Muslim fighters.
The proposed U.N. force of 10,000 troops and 2,000 police is not scheduled for deployment until September. Must the defenseless wait four months? African Union and French troops are already patrolling C.A.R. communities. Surely these forces could be beefed up while the U.N. deployment is prepared. The new U.S. special representative must do everything in his power to equip and embolden the forces on the ground right now.
Days after the United Nations approved the September deployment, U.N. officials met to somberly commemorate the 20th anniversary of the Rwanda genocide. The international community did too little, too late to respond to rising tensions in that central African state. To its great shame, the result was genocide. Will the world’s nations meet 20 years hence to mull over the many failures and strategic foot faults that contributed to a similar catastrophe in the Central African Republic? Time is short.
Read All About It!
When the Pulitzer Prize winners are announced each year, many journalism professors are eager to see whether any of their former students have won. But this year journalism educators had another point of pride. The student papers’ local competitors are now the ailing “real” papers in town. At the University of Michigan, news broke in January that the football team’s senior place-kicker had been “separated” permanently from the university because of a sexual assault in 2009, but the story had been covered up until his football career came to an end last winter. It was the student-run Michigan Daily, not The Ann Arbor News, a chain paper that has cut back to twice a week in print, that broke the story. With a staff of 200 to 250 students and a five-day-a-week publication schedule, the students have stepped in to meet the town’s need for sports and cultural coverage.
According to “Local News, Off College Presses” (The New York Times, 4/14), Michigan is not alone. While roughly 1,800 U.S. colleges and universities sponsor student newspapers, only 1,380 cities have daily papers, and many are shrinking. Journalism programs, rather than withdrawing from the fray, are becoming more professional. Arizona State University produces print, online and broadcast stories syndicated to 30 news outlets in the state. Meanwhile, The Harvard Crimson reported on the university administration’s secret search of the email accounts of 16 resident deans. Within a few years, expect the Pulitzer committee to give a prize to the best college paper for investigating a national scandal.